Net Gains: HR Technology in the '90s, Today

Two decades ago, when a produce manager or checker at one of Hannaford Bros. Co.'s 95 grocery stores wanted to look up the balance on a 401(k) account, that employee dialed into a voice-activated telephone system.

The Scarborough, Maine, company's 15,000 workers also used the 16-line, state-of-the-art touch-tone system to check on their medical benefits or enroll in the company stock-purchase plan, according to a 1993 Personnel Journalarticle on HR technology advancements.

In the early 1990s, interactive phone systems were the height of innovation in human resources technology, along with HR processes running on mainframes and employee training or education materials stored on laserdiscs—for our millennial readers, think DVDs on steroids—and queued up on desktop computers or TV screens.

But all that was about to change.

The decade that witnessed the fall of the Soviet Union, scientific breakthroughs such as the launch of the Hubble Space Telescope and Human Genome Project, and the emergence of iconic pop-culture fare—including the TV shows Seinfeldand The Simpsons—also ushered in the dawn of the information age.

In a span of a few short years, what had passed for cutting-edge workplace and HR technology was supplanted by office productivity suites and other software running on local area networks, or LANs, and the vast global computer network that became known, simply, as the Internet.

By the end of the 1990s the ever-expanding World Wide Web of browser-friendly information led to the birth of such tech power players as Amazon.com, eBay, Yahoo and Google. The dot-com boom they helped create transformed forever the way companies sold things, helped customers and got work done.

The effect of such advancements on HR departments paved the way for today's tech-enabled approach to people management.

Cheap computers, mobile devices and software sold as a service over the Internet are a direct continuation of that revolution, and the latest and greatest HR systems are now within economic reach for even the smallest startup.

Yet, for all that's changed in the past 20 years, some things have taken after Bart Simpson's haircut and stayed the same. Companies are just now starting to mine employee data to improve workforce planning. Industry watchers say too few top-level HR leaders have the technological know-how to make full use of what modern HR systems offer, a criticism not unlike one leveled against HR management in the 1993 article "How Technology Is Advancing HR."

It is a frustrating but understandable deficit given that HR leaders also must stay abreast of the business of the company they work for and the role HR plays in it, according to longtime industry analysts interviewed for this story.

"The technology today is enormously capable. The cost is not insurmountable, and the workforce is tech-literate, and increasingly so," says analyst and consultant Naomi Bloom, who has worked with HR information systems since the 1960s. "But we're still not making effective use of tech in human capital management, and the barrier is the inability of the HR community to both master its deployment and plan for needed transformation in the practice of HR."

The Internet was such a game-changer that it's hard to regard the workplace technology before it existed as anything but quaint.

Two decades ago, companies still relied on mainframe or minicomputers to run payroll, time and attendance, and other processes. Everything was costly and slow.

"You had to be an HR professional to update an HR record," says Vincent Tuccillo, global HR information management and solution delivery manager at mailing-equipment-maker Pitney Bowes Inc., where he's worked since the 1990s. Given how long it took to plug employee data into such systems and the rate of workforce turnover, "You could be terminating an employee before the new hire record got into the system," he says.

During the big-iron era, in which mainframe computers locked inside massive air-conditioned basement chambers processed business information, companies such as Oracle Corp. ruled HR. That changed with the advent of PCs and client-server computer systems, where instead of mainframes running programs that users accessed through dumb terminals, computing tasks were distributed through a local or far-reaching network of devices. It paved the way for upstarts such as PeopleSoft Inc. and Sybase Inc. to introduce client-server human capital management software.

For many HR departments, it was a great leap forward to scan paper résumés with optical readers into rudimentary applicant tracking systems, and store performance reviews in Excel spreadsheets instead of manila folders and metal filing cabinets. "It was miraculous that you could do it on a computer and not paper," says Josh Bersin, president and CEO of consulting firm Bersin & Associates, who witnessed the changes working at IBM and Sybase during the 1990s.

But it wasn't exactly a smooth transition.

Even as PCs' computing power increased and prices dropped, corporate HR information technology departments had to be convinced that software built from the ground up to run on desktops could meet their needs, says Stan Swete, who held key leadership roles at PeopleSoft in the 1990s and today is Workday Inc.'s chief technology officer. "My job was to have endless conversations with mainframe-based techies who thought it [client-server software] could never perform, and it wasn't a high performance way to get data," he says.

Gradually the techies came around, though, especially when it became apparent that client-server software could handle process-intensive functions a lot faster, freeing up HR departments to focus on more strategic duties. "PeopleSoft was eating everyone's lunch," says Lisa Rowan, HR, talent and learning strategies program director at technology analyst IDC. "They had a much nicer user interface. It sat on your desktop and it was thought to be easier to use—all the things we didn't have before," says Rowan, who spent the 1990s at Digital Equipment Corp. and Genesis Software, an HR payroll applications provider.

As more companies used client-server software, it led to a blossoming of other types of HR programs: résumé scanning systems such as Resumix, which over time morphed into applicant tracking systems; performance management tools; and expense account trackers to name few. "A lot of what we see today as cloud computing is taking the client-server software we had in the 1990s and rebuilding it on the Web," Bersin says.

A wave of HR startups was behind a lot of that software. By the end of the decade, that wave included some of the first purveyors of HR software sold exclusively on a software-as-a-service basis that in more recent times has taken the HR technology business by storm, including companies such as Taleo Corp., SuccessFactors Inc., and Cornerstone OnDemand Inc. "It was the birth of the next generation of HR technology," says Cornerstone vice president Jason Corsello, who at the time worked in operations and business development for electronics manufacturer Flextronics.

The march of progress also transformed interoffice communications. In the 1990s, email was the new kid on the block, and like social media today, companies often stumbled figuring out how to use it. At one early point, for example, Flextronics' Singapore headquarters had a single email address for an entire group. "Can you imagine that today?" Corsello asks.

The confusion didn't last. By 2000, 48 million Americans a day were sending or reading email at home and at work, according to the inaugural Pew Research Center's Internet & American Life Project survey published that year. Email use skyrocketed from there, and is expected to hit 3.3 billion users worldwide this year, and 4.3 billion by 2016, according to email researcher the Radicati Group Inc.

But even as email's use grew, it changed from one of the fastest modes of business communication to one of the slowest. Today, that speed issue is causing more companies to look for alternatives, especially as they catch up with tech-savvy employees who've abandoned email for Facebook, Twitter and texting. More companies are adopting social media-style online collaboration tools such as Yammer, text messages, group texts and videoconferencing.

In the 1990s, the Internet also had an enormous effect on how companies found and managed employees. Early in the decade, "Talent management wasn't even heard of," says Jason Averbook, founder and CEO of HR consultant Knowledge Infusion, who worked at payroll processor Ceridian Corp. and then PeopleSoft in the 1990s.

Within eight or nine years, all big companies ran employment websites, used job boards to advertise open positions and were starting to use software for recruiting, assessments, performance reviews and other phases of talent management.

At the start of the 1990s, HR departments were running employee onboarding and training programs on then state-of-the-art video or laserdisc systems that displayed images via a computer or TV screen, and using telephone-based employee benefits programs

Such technologies were vast improvements over what they replaced, but they had limitations. Companies were often forced to choose between incompatible technology standards. Software and the equipment the programs ran on were expensive. Laserdisc-based learning started at $5,000 for off-the-shelf systems and custom installations ran up to $300,000, according to the 1993 Personnel Journal article.

Interactive phone systems such as the one Hannaford Bros. installed in 1990 cost $10,000 to $75,000 and had limited functions. Employees could use the original touch-tone system to change how much of their salary they put into their 401(k) account, but they couldn't move funds from one investment to another or take money out of their account. For that, "You had to call a number and talk to someone," says Chip LeBlanc, director of health and retirement benefits for Delhaize America. It's the division of Belgium conglomerate Delhaize Group that acquired Hannaford in 2000 and runs it as part of a 1,500-store East Coast grocery chain..

Hannaford eventually replaced its phone-based system with a Web portal integrated into the company website. For the past decade, Delhaize America's 100,000 U.S. employees have used the self-service site to access medical, benefits and 401(k) accounts, though the company continues to use a phone-based service during open-enrollment season. "We're not bleeding-edge, but we continue to be progressive," LeBlanc says.

By moving its benefits program to the Web, Hannaford joined hosts of companies placing more power to interact with HR systems into the hand of their workers, a transformative concept that came to be known as employee self-service. "It gave managers and employees a user experience, instead of knocking on HR's door" for information, says IDC's Rowan.

Employee self-service was the precursor to the hands-on nature of modern HR, where employees use Web or mobile apps to turn in expenses, recognize co-workers for a job well done, check benefits, compete against officemates in corporate wellness challenges and share their companies' job openings with their friends on Facebook or Twitter.

Today's workforce expects HR to accommodate its needs through multiple channels, a trend driven by an increasingly multigenerational workforce. "They want a mobile app and Web-enabled and to talk to someone when they want to talk to someone," says Hannaford's LeBlanc. "They want all points of access to us. We are certainly aware of that and absolutely take that into consideration as we develop long-term plans, and as we look to partner with outside vendors, so that any partners we use can meet our needs."

Despite the progress of the past 20 years, some of the improvements that faster, cheaper, more ubiquitous computer processing power, client-server and Internet-based software promised remain unfulfilled. HR departments may have upgraded to client-server and more recently to cloud-based systems. But many failed to change the underlying processes upon which their HR practices were built, and without that, the latest tech bells and whistles aren't much good. "They're still thinking the same way when it comes to the outcomes they are trying to achieve, and if they don't change that, it's not going to make a difference," Averbook says.

Averbook and other industry watchers also see companies only just starting to tap the power of "big people data," in-depth analysis of employee statistics to drive better workforce or business planning.

For HR leaders, transforming their business practices to match the firepower of current people management technology and making use of the aggregate employee data that cloud-based software can generate will be the twin challenges of the next 20 years. Says Bersin: "The amount of technology available is huge, and the benefit is huge, and the risk of making a mistake is huge. HR professionals today have to get with it or hire people who are."